Measuring for Business Success
Tip for April 2008 - Volume 1
Key Techniques:
Test Marketing Pointers for Restaurateurs, Part 1
Keeping your restaurant(s) “fresh” is critical to continued success in the food service business.
If you want or need to grow your restaurant’s sales, you absolutely must try to change something: introduce new menu items, try a new marketing technique, change the dinnerware, or any of hundreds of other things that you believe have a chance of boosting sales and profits.
Even if you are already happy with the financial performance of your restaurant, you need to introduce small changes every so often, to prevent customers from getting “bored” with you. Otherwise, you leave yourself open to being ignored when a new restaurant opens in your neighborhood.
But change is also very risky. A change can just as easily ruin your business. Even in large, professionally-managed public companies, only 20 percent of new ideas hit their targeted goals. The other 80 percent turn out to be only “good on paper”.
A tried and proven technique for improving the chances of a successful change is to do a “test market”. All the giant chains do extensive test-marketing of new concepts before rolling them out to all their stores.
If you run a small group of restaurants, or even just a single one, you should still do test-marketing. You just have to make sure you follow certain guidelines:
- Try the concept on friends, family, and any other test subjects you might find, first. Do this outside of your restaurant, before actually making the change.
- Make sure you can “undo” the change quickly if it fails to meet your criteria for success. For example, don’t throw away old equipment if you are trying some new equipment, in case the test reveals that the new equipment isn’t as good as claimed.
- Make sure you have prepared the reporting and analytics systems you need to measure performance during the test period. If you can’t measure performance properly, test-marketing is just a waste of time and money!
We will discuss specific tips about measuring test-market results in the next newsletter. Here are some summary points:
- Select a “benchmark” and “baseline” to compare the “new idea” against.
- Identify reports, charts, spreadsheets, and other sources of measurement data you will need to monitor trends during the test period.
- Identify and keep sales and other relevant reports for an appropriate comparison period.
- Ensure that you have the systems and data to eliminate seasonality, cyclicality, and irregularity from the test-period data
